New home sales hit a record low

The Commerce Department said sales dropped 11.2 percent to a 309,000 unit annual rate, the lowest level since records started in January 1963, from an upwardly revised 348,000 in December.

It was the third straight month that new home sales fell and the percentage decline in January was the largest in a year. Analysts polled by Reuters had expected new home sales to increase to a 360,000 unit annual pace from December’s previously reported 342,000 units.

Compared to January last year, sales fell 6.1 percent.

"It’s awful. This is with the home buyer tax credit. I don’t understand people who say the housing market is turning," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

Exactly! There is no evidence the housing market is turning. It has stabilized and property prices are moving up in former bubble cities like Phoenix, San Diego, San Francisco and LA. But that’s all. I do tend to see those same bubble cities as canaries in the coalmine i.e. as San Diego housing goes, so goes the U.S. But there is nothing axiomatic about this. It’s early days still. Let’s wait until the summer selling season to start opening up bottles of bubbly.

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.